Merrill leaps back into recruiting with $3.5B team from JPMorgan

Merrill trumpeted its biggest recruiting coup in years Friday with the announcement that it was drawing from JPMorgan a $3.5 billion team of former First Republic advisors.

Merrill, which has just been returning to the recruiting game following a long dormant period, has lately been much more on the losing than the winning end of headhunters' raids. That shifted on Friday with what's likely the largest single-team AUM deal announced so far this year.

Merrill's new acquisition consists of a 12-person team operating out of Palm Beach Gardens, Florida. It's led by Salvatore Tiano and John E. Smyth, two ex-First Republic wealth managers who joined JPMorgan last year when it bought their former employer out of government receivership. A source familiar with the deal said the team was producing $15 million a year in revenue at JPMorgan.

Rick Rummage, an industry recruiter and the CEO of The Rummage Group, said the deal proves Merrill is serious about returning to the recruitment game. Rummage said he believes Merrill is now offering recruiting deals worth upwards of 350% of their past year's revenue. That would put it in the running for some of the most generous offers in the industry, which have been running between 300% and 400% in recent years.

"Merrill is unhinged with how aggressive they've become with their deals for any advisors with in excess of $1 million in revenue," Rummage said. "They are trying to get back into the recruiting game and make up for lost time in a big way."

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A Merrill spokesperson declined to comment on the recruitment offer or why Tiano and his colleagues chose Merrill. A JP Morgan spokesperson declined to comment on the deal.

Phil Waxelbaum, another industry recruiter and the founder of Masada Consulting, agreed that the deal is a sign that Merrill must have offered a "dumbfounding amount."

Yet, while acknowledging the deal is impressive, Waxelbaum said it's ultimately not meaningful for Merrill's long-term recruiting prospects. Likening it to "buying the biggest house in the ugliest neighborhood," Waxelbaum said Merrill can't hope to build a solid recruitment operation with one mega-acquisition.

"Now if they were buying all the little houses in the neighborhood and they also bought the mansion on the corner lot, they'd have something there," he said. "But this doesn't mean anything."

Merrill effectively quit recruiting under its former wealth management head Andy Sieg and instead placed its emphasis on training new recruits and retaining its top teams. But after Sieg left Merrill in March 2023 to oversee Citi's wealth management ambitions, his two successors — wealth co-heads Lindsay Hans and Eric Schimpf — moved quickly to reignite the firm's recruitment engine.

Yet, until Friday at least, the firm had barely made a ripple. Rummage said he thinks Merrill's recruiting victory from JPMorgan will help provide the type of momentum that tends to build on itself. Rummage said advisors keep tabs on which firms are gaining advisors and which are losing.

"And when they see a big win, that means something," he said. "Humans tend to flock together, and they tend to believe there's safety in numbers."

Waxelbaum said the departure from JPMorgan shouldn't come as a surprise, noting that Tiano was on his second stint at the banking firm. Tiano brought his team to First Republic in 2020 after coming to JPMorgan's securities arm through its Bear Stearns predecessor.

"He didn't leave JPMorgan just to end up back at JPMorgan," Waxelbaum said.

Waxelbaum said Tiano, who's been in the industry nearly 35 years, is no doubt thinking about his career arc.

"He's closer to the end than to the beginning," Waxelbaum said. "He probably views this as a last dance. So you might as well get paid as much as you can."

Tiano's partner, John Smyth, started his career at Kidder Peabody in 1994 and had stints at PaineWebber and Morgan Stanley before joining JPMorgan Securities in 2010 and then leaving for First Republic in 2020.

Besides Tiano and Smyth, the team Merrill is picking up consists of four other wealth managers — Greg Saville, Daniel Tumba, Justin Makso and Jason O'Brien — and six client associates. They'll be in Merrill's private wealth management group, which works primarily with high net worth and ultrahigh net worth clients.

Rummage said it's little surprise that a team made up of former employees of First Republic would choose to leave JPMorgan. First Republic's small-firm feel, he said, was lost no doubt the minute it was taken over by the Wall Street banking behemoth.

Merrill might seem an odd choice for advisors looking to slip out from the shadow of a giant, Rummage conceded. But Merrill, he said, is at least a firm whose origins were in wealth management and whose name is widely recognized to this day.

"That's why they picked Merrill Lynch, because it's a big brand," he said.

True, Rummage said, many advisors complain that Merrill is overshadowed by its parent company, Bank of America.

"But at JPMorgan, you feel like you're at a bank and happen to be an advisor," he said. "At Merrill, you feel like you're a financial advisor that happens to be at a bank."